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M/S Greenfinch Team Management v. M/S Bundl Technologies Pvt. Ltd.

Karnataka HC23 Jun 2022CMP/155/2021

Case brief

AI extract

What is this about?

This court disposed of a petition under Section 11 of the Arbitration and Conciliation Act, 1996, to appoint a retired High Court Judge as sole arbitrator. The court rejected the respondent's plea that pending fraud allegations against the petitioner before GST authorities precluded arbitration.

What did the court decide?

Appointment of Sri P. Vishwanath Shetty, Former Judge of this Court, as sole arbitrator with aegis of Bangalore Arbitration Centre.

M/S Greenfinch Team Management Vs M/S Bundl Technologies Pvt… — Arbitration | Karnataka HC (2022)

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CMP No. 155 of 2021

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 23^RD DAY OF JUNE, 2022

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BEFORE

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THE HON'BLE MR JUSTICE SURAJ GOVINDARAJ

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CIVIL MISC. PETITION NO. 155 OF 2021

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BETWEEN:

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M/S GREENFINCH TEAM MANAGEMENT PVT LTD., A COMPANY INCORPORATED UNDER THE COMPANIES ACT 1956 HAVING ITS REGISTERED OFFICE 151 THE CORENTHUM, SECTOR-62 NOIDA - 201301 REP BY ITS AUTHORIZED REPRESENTATIVE MS. JYOTI (BY SRI. SUMIT RANA, ADVOCATE SRI. SURAJ KOTE, ADVOCATE-PH)

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…PETITIONER

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AND:

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Digitally signed by POORNIMA SHIVANNA Location: HIGH COURT OF KARNATAKA

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M/S BUNDL TECHNOLOGIES PVT LTD A COMPANY INCORPORATED UNDER THE COMPANIES ACT 1956 HAVING ITS REGISTERED OFFICE NO.55, SY NO.8-14 GROUND FLOOR I AND J BLOCK, EMBASSY TECH VILLAGE OUTER RING ROAD, DEVARBISALAHALLI BENGALURU-560103, KARNATAKA REP. BY ITS CEO SRI. HARSHA MAJETY

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ALSO AT 3^RD FLOOR, (INTERNALLY DESIGNATED AS 4TJ FLOOR), MARUTHI CHAMBERS, SY.NO.17/9B ROOPENA AGARAHARA, BANGALORE-560068 KARNATAKA

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AND CORPORATE OFFICE AT 9^TH FLOOR TOWER D, IBC KNOWLEDGE PARK BANNERGHATTA MAIN ROAD BANGALORE-560029

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…RESPONDENT

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CMP No. 155 of 2021

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(BY SRI. RAVI RAGHUVAN AND SRI. A.S. ANIRUDDHA, ADVOCATESPH)

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THIS CMP IS FILED UNDER SECTION 11 OF THE ARBITRATION AND CONCILIATION ACT, 1996 PRAYING TO A RETIRED JUDGE OF HIGH COURT AS SOLE ARBITRATOR TO ADJUDICATE THE DISPUTES BETWEEN THE PARTIES IN TERMS OF CLAUSE 23(2), 23(3) AND 23(4) OF THE AGREEMENT DATED 11.04.2019 AT ANNEXURE-B HEREIN, IN THE INTEREST OF JUSTICE AND EQUITY AND ETC.

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THIS CMP COMING ON FOR ADMISSION, THIS DAY THE COURT MADE THE FOLLOWING:

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ORDER

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The petitioner is before this Court seeking for the following reliefs:

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a. A retired Judge of High Court as sole Arbitrator to adjudicate the disputes between the parties in terms of clause 23(2), 23(3) and 23(4) of the Agreement dated 11.04.2019 at Annexure-B herein, in the interest of justice and equity.

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b. Pass such other order/s as this Hon’ble Court may deem fit on the facts and circumstances of the case, in the interest of justice and equity.

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The petitioner and the respondent entered into an agreement dated 11.04.2019 styled as a ‘Master Services Agreement’. Said agreement is governed by an arbitration clause. In terms of Clause (23) which is

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reproduced hereunder for easy reference:

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Governing Law & Dispute Resolution:

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CMP No. 155 of 2021

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23.1 The Parties shall, mutually and in good faith, attempt to resolve any dispute, controversy or claim (“Dispute”) between them within 30 (thirty) days after the initiation of such informal proceedings.

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23.2. If, the Parties fail to amicably resolve the Dispute within the 30 (thirty) days period referred above, then, either Party may refer such dispute or difference to arbitration.

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23.3. The arbitration shall be conducted in accordance with the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) and the rules made thereunder, under the aegis of a single arbitrator appointed jointly by the Parties. In case the Parties fail to appoint an arbitrator within 30 (thirty) day from the submission of dispute for settlement through arbitration, the arbitrator shall be appointed in accordance with the provisions of the Arbitration Act.

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23.4. The venue of arbitration shall be Bangalore and the arbitration shall be conducted in the English language.

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23.5. The decision of the arbitrator shall be final, binding and non-appealable except in case of manifest error In those instances where the dispute or difference referred to arbitration relates to or involves any matter or thing in respect of which the decision, opinion or determination is final and binding on the Parties in terms of the Agreement, such decision, Opinion and/or determination as the case may be, shall be final, binding, and not subject to further appeal.

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23.6. This agreement shall be construed in accordance with the laws of India and subject to the provisions of Clause 23.2, 23.3, 23.4 and 23.5 above, the courts at Bangalore shall have the exclusive jurisdiction in respect of any matter or dispute connected with this Agreement.

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There being certain disputes between the petitioner

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and the respondent, the petitioner has invoked

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CMP No. 155 of 2021

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arbitration clause vide legal notice dated 29.12.2020 and suggested the panel of arbitrators for the respondent to make a choice. On the said notice having been served, the respondent replied to the notice contending that no services have been availed by the respondent and there are no amounts which are required to be paid by the respondent and as such, the request of the petitioner for appointment of an arbitrator was rejected. It is in that background that the petitioner is before this Court.

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Learned counsel for the petitioner submits that there being a dispute between the parties cannot be questioned and it is therefore, required that the matter be referred to arbitration.

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Learned counsel for the respondent submits that the petitioner has allegedly involved himself in fraud with GST authorities and GST authorities having issued notice to the petitioner and there being fraud committed by the petitioner as regards the

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CMP No. 155 of 2021

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transactions between the petitioner and respondent,

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the matter cannot be referred to arbitration.

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The learned counsel for the respondent relies upon the decision of the Hon’ble Apex Court in A.Ayyasamy - v- Paramasivam [(2016)10 SCC 386] to contend that whenever there are issues relating to fraud which touch upon the public domain, the matter cannot be referred to arbitration.

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Heard Sri.Sumit Rana, learned counsel for Sri.Suraj Kote, learned counsel for the petitioner, Ms.Aishwarya, learned counsel for respondent. Perused papers.

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The agreement between the petitioner and respondent is not disputed nor is the existence of the arbitration clause. The only contention raised by the respondent is that the petitioner has allegedly involved in fraud of the GST Authorities as regards which GST authorities have initiation action against the petitioner and

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CMP No. 155 of 2021

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therefore, the matter cannot be referred to

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arbitration.

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On enquiry, learned counsel for the respondent submits that the respondent has not initiated any action against the petitioner for fraud or otherwise. Even according to the counsel for the respondent, the alleged fraud is by the petitioner as regards the GST authorities. In my considered opinion, the same cannot be a reason for delaying or negating the arbitration proceedings between the petitioner and the respondent. In the event of there being any truth in the allegations made by the respondent that the petitioner has allegedly defrauded the GST authorities, it is for the GST authorities to take action and the same would not come in the way of the initiation and culmination of arbitration proceedings as regards the dispute between the petitioner and respondent.

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CMP No. 155 of 2021

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The decision in Ayyasamy case (supra) is also not

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applicaable to the present case, since in that case, it was categorically held that mere allegations would not be sufficient to deny arbitration unless the fraud goes to the validity of the contract, thereby negating the existence of the arbitration clause itself. In the present case, there is no fraud alleged as regards the agreement entered into between the parties, the fraud alleged is as regards a third party (GST authorities). Therefore, the decision referred to above would not come to the rescue of the respondent, I am of the considered opinion that there can be no further delay in appointment of an arbitrator.

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At this stage, Ms. Aishwarya, learned counsel for the respondent submits that the respondent has no objection for the appointment of the nominee of the petitioner as sole Arbitrator. Hence, I pass the following:

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CMP No. 155 of 2021

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ORDER

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i) Sri.P.Vishwanath Shetty, Former Judge of this Court is appointed as a sole arbitrator to arbitrate the dispute between the parties;

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ii) It is made clear that this Court has not expressed any opinion on the merits of the matter and all issues and contentions are kept open for the said arbitrator to decide;

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iii) The arbitration to be carried out under the aegis of the Bangalore Arbitration Centre; and

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iv) Registry is directed to forward a copy of this order to the Director, Bangalore Arbitration Centre.

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Sd/JUDGE

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M/S Greenfinch Team Management v. M/S Bundl Technologies Pvt. Ltd.

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M/S Greenfinch Team Management v. M/S Bundl Technologies Pvt. Ltd.

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